The declines are likely to be particularly painful for people who took out debt to buy virtual currencies at high prices. Even the lows hit on Wednesday are still well up some 1,000 percent from where Bitcoin began 2017. But that is little comfort for the people who purchased late last year.

One person on Reddit wrote about persuading family members to buy digital tokens late in 2017 and regretting it.

“Fast forward to today,” the user, going by the screen name PM_ME_UR_ROOM_VIEW, wrote. “I opened my phone and I find a barrage of messages from them accusing me of scamming them and tricking them into crypto because they lost money, I tried to explain to them that this is normal and it will bounce back soon and it’s just a correction and don’t sell but they aren’t listening.”

For skeptics of virtual currencies, the falling prices have provided some vindication.

“Most people are buying Bitcoin, not because of a belief in its future as a global currency, but because they expect it to rise in value,” a note from economists at Capital Economics said on Wednesday. “Accordingly, it has all the hallmarks of a classic speculative bubble, which we expect to burst.”

The pessimism in recent days has been fed by several reports that governments around the world were planning to tighten the reins on virtual currency trading.

The Chinese government has already shut down exchanges in China, but it was recently reported to be taking even further measures against new forms of online trading as well as Bitcoin mining operations in the country.

Bitcoin, which began in 2009, has been through these sorts of wild swings before. The price spiked in late 2013 to above $1,000, before moves by the Chinese government sent the price sliding. It was only last year that the price again recovered to the same levels.

Since that recovery, an array of virtual currencies have been on a nearly uninterrupted tear. With Bitcoin, investors have been betting that it could be a new kind of asset, outside the control of any government, something like digital gold.

Investors have also been putting money into newer virtual currencies like Ethereum and Ripple, which were designed to do more sophisticated types of transactions than Bitcoin.

The excitement has been amplified by hedge funds that were created in the last year to invest in virtual currencies and by Wall Street institutions that have expressed an interest.

But investments in these new tokens have far outstripped their real-world use in the types of transactions for which they are intended. Ripple, for example, is supposed to help financial institutions transfer money across international borders. But only a few institutions have said they are using the currency, known as XRP, for that purpose.

Some longtime virtual currency investors have said that a major price pullback was necessary after the hype had gotten so far ahead of the reality.

“This is the ecosystem purging the ‘easy money’ crowd that arrived in past couple months,” Spencer Bogart, a partner with the hedge fund Blockchain Capital, wrote on Twitter.

Prominent individual investors echoed that sentiment. “I usually recommend people to buy during dips like these if they were hesitant to enter the market before because you can get in on a discount,” said James Spediacci, who with his brother Julian runs an investment club for virtual currency investors.

Monica Quaintance, lead engineer at a company working on technology related to digital currencies and an organizer of events for women interested in them, said investors should expect price volatility until there is strong government regulation. “People want to know that if they make a lot of money from Bitcoin they’re going to be able to keep the money,” Ms. Quaintance said.

But for those less enamored of the technology, the declines are viewed as the beginning of an even steeper fall.

“The latest price falls suggest that the bubble is bursting although with prices still ten times higher than a year ago, they have a lot further to fall yet,” Capital Economics wrote.